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Albania  

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ALBANIA


  
  

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 6,124 4,695 4,100 109
         
GNI per capita
 US $ 1,740 1,380 1,340 120
Ranking is given out of 208 nations - (data from the World Bank)

Books on Albania


Update No: 130 - (26/03/08)

The festering problem of Kosovo
There is no doubt what the biggest problem facing Albania is, the negotiation of the Kosovo crisis. Tirana has made it quite clear that it is not interested in a Greater Albanian union with Kosovo, which declared independence on February 17.

It is for the international community to pick up the pieces there and to finance the stricken economy. Nevertheless, the crisis could help Albania realise its international ambitions.

Into NATO?
Obtaining NATO membership is Tirana's greatest political goal for 2008. Despite not receiving an invitation to join the Alliance at the previous summit -- mainly due to the country's political problems related to elections and corruption -- Albania's primary political leaders anticipate they will receive an invitation at the summit in Bucharest in April. 

If Albania becomes a NATO member this year, it will gain increased opportunities for progress due to the improvement of the country's image, the credibility of the government and the establishment of a more secure environment for economic development and foreign investments. 

Economy booming
Albania achieved a GDP growth of 6 p.c. in 2007, according to the Institute of Statistics, which is a public institution that processes statistical data in the country. 

"We achieved this level of growth, despite the fact that we had a serious energy crisis throughout the year," said Prime Minister Sali Berisha during a meeting with media representatives in December. He added that "this figure is also the target for 2008". Meanwhile, inflation has been kept at 3 p.c. as a result of a strong control system. 

The government has prepared a very ambitious budget for 2008 -- Albania's largest in the last 18 years. Almost 822m euros -- 20 p.c. of the budget -- is planned to be allocated for investment in national and local roads. The government has asked domestic and foreign construction companies to schedule three shifts, so work can continue 24 hours a day. The next elections will be held in 2009, so this year is the government's last opportunity to fulfil the electoral promises it made three years ago when Berisha's Democratic Party came to power. Therefore, the government is accelerating the implementation of development projects -- especially related to infrastructure. 

The Albanian public administration, however, is facing many difficulties regarding the absorption and management of projects and money. Last year, only 80 p.c. of investments were carried out. International organizations, including the EU, have expressed their concern several times regarding the absorbing potential of the public administration. 

Boost to trade and FDI
Kosovo´s independence is expected to be very important for the development of Albania. Tirana is certain that an independent Kosovo will bring stability to the region, and Albania expects to eventually benefit from this stability by increasing trade between the countries. Kosovo does not require visas from Albanians and increased communication is anticipated due to the potential growth of Kosovo's post-independence economy. One of the government's major projects that will increase traffic between Kosovo and Albania is the Durres-Kukes Highway. After the government voted last year to approve the project, a US-Turkish company, Bechtel-Enka, began construction of the road, which will cost 600m euros and is to be completed by 2009. 

Albania -- which only ten years ago was involved in major political and social turmoil -- has seen an overall increase in Foreign Direct Investments (FDI). Many large companies have already expressed an interest in or begun implementation of projects, primarily dealing with the energy sector and transmission grids. ASG Power, a Swiss-US multi-national company, has been given approval to begin construction of a power plant and re-gasification terminal in the area of Seman, 100km from Tirana. The project will receive an investment of almost 2.5 billion euros and will include a transmission line connecting Albania with Italy through the Adriatic Sea. 

Simultaneously, another large US company launched a study of major oil and gas reserves in the country in mid-January. Albania has considerable oil and gas reserves, which may reach 3 billion barrels of oil and 3 billion cubic metres of natural gas, according to the study carried out by international consultant Gustavson, which was hired by Manas Petroleum. If the study is accurate, then Albania will have opportunities for its economic strategy in 2008 and, in the future, may become an oil and gas exporter. Albania's FDI for 2007 was more than 400m euros and is expected to be much higher this year based on interest expressed by foreign businesses in industries such as the energy sector and construction materials. 

Berisha declared to the Strategies Planning Commission on January 19th that "2008 is the year when the fiscal package will be entirely installed, which will bring about the deepest fiscal revolution in the history of this country." The new fiscal package includes a 10 p.c. flat tax and the 1euro initiative, which allows foreign companies to pay 1 euro for public rents and licenses. Both are designed to attract businesses to Albania, as well as to stimulate domestic companies to increase production and employment.

Problems still there 
However, Albania does face challenges. It suffers from an energy crisis and lack of diversification of energy resources. Although the government has made continuous promises to solve this issue within the year, it will be hard pressed to do so.

Additionally, the country is still poor, with a growing gap between the rich and the needy. In fact, Albania ranks near countries such as Russia or Third World countries, which have a very large difference between the rich and poor. The fight against corruption and 'informality' is a continuous struggle, and this phenomenon seems to be moving instead of dissipating. Corruption is not only seen in central administration, but now has also reached the services sector. Also, although thousands of informal assets are being formalized, problems still exist in tax and duty collection.

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